Taxpayers charged $34 million to make Trump’s backup jets more ‘presidential’

With the announcement of a new Boeing contract to “update” Air Force Two, the Pentagon is slated to spend $34 million taxpayer dollars to make Donald Trump’s presidential jets fancier.

Defense One reported that over the past 14 months, the Defense Department has spent tens of millions of dollars contracting aircraft monolith Boeing to “refurbish” the interiors of two backup Air Force One planes that are frequently used by the vice president and cabinet officials.

The most recent contract, as first reported by the Washington Examiner, is for more than $16 million to create an “appearance more commensurate with [the] presidential section” of Air Force One on the twin-engine 757. According to the Pentagon, the latest Boeing contract will include “upgraded interior elements,” “refurbished interior elements” and “painting and cleaning.”

This isn’t the first of such contracts the DOD has taken out with Boeing. Defense One noted that on June 30, 2017, the Pentagon awarded the corporation nearly $18 million for “engineering support services for refurbishment of the interior” of the other backup Air Force One.

[Raw Story]

Trump Administration Mulls a Unilateral Tax Cut for the Rich

The Trump administration is considering bypassing Congress to grant a $100 billion tax cut mainly to the wealthy, a legally tenuous maneuver that would cut capital gains taxation and fulfill a long-held ambition of many investors and conservatives.

Steven Mnuchin, the Treasury secretary, said in an interview on the sidelines of the Group of 20 summit meeting in Argentina this month that his department was studying whether it could use its regulatory powers to allow Americans to account for inflation in determining capital gains tax liabilities. The Treasury Department could change the definition of “cost” for calculating capital gains, allowing taxpayers to adjust the initial value of an asset, such as a home or a share of stock, for inflation when it sells.

“If it can’t get done through a legislation process, we will look at what tools at Treasury we have to do it on our own and we’ll consider that,” Mr. Mnuchin said, emphasizing that he had not concluded whether the Treasury Department had the authority to act alone. “We are studying that internally, and we are also studying the economic costs and the impact on growth.”

Currently, capital gains taxes are determined by subtracting the original price of an asset from the price at which it was sold and taxing the difference, usually at 20 percent. If a high earner spent $100,000 on stock in 1980, then sold it for $1 million today, she would owe taxes on $900,000. But if her original purchase price was adjusted for inflation, it would be about $300,000, reducing her taxable “gain” to $700,000. That would save the investor $40,000.

The move would face a near-certain court challenge. It could also reinforce a liberal critique of Republican tax policy at a time when Republicans are struggling to sell middle-class voters on the benefits of the tax cuts that President Trump signed into law late last year.

“At a time when the deficit is out of control, wages are flat and the wealthiest are doing better than ever, to give the top 1 percent another advantage is an outrage and shows the Republicans’ true colors,” said Senator Chuck Schumer of New York, the Democratic leader. “Furthermore, Mr. Mnuchin thinks he can do it on his own, but everyone knows this must be done by legislation.”

Capital gains taxes are overwhelmingly paid by high earners, and they were untouched in the $1.5 trillion tax law that Mr. Trump signed last year. Independent analyses suggest that more than 97 percent of the benefits of indexing capital gains for inflation would go to the top 10 percent of income earners in America. Nearly two-thirds of the benefits would go to the super wealthy — the top 0.1 percent of American income earners.

Making the change by fiat would be a bold use of executive power — one that President George Bush’s administration considered and rejected in 1992, after concluding that the Treasury Department did not have the power to make the change on its own. Larry Kudlow, the chairman of the National Economic Council, has long advocated it.

Conservative advocates for the plan say that even if it is challenged in court, it could still goose the economy by unleashing a wave of asset sales. “No matter what the courts do, you’ll get the main economic benefit the day, the month after Treasury does this,” said Ryan Ellis, a tax lobbyist in Washington and former tax policy director at Americans for Tax Reform.

Liberal tax economists see little benefit in it beyond another boon to the already rich.

“It would just be a very generous addition to the tax cuts they’ve already handed to the very wealthy,” said Alexandra Thornton, senior director of tax policy at the liberal Center for American Progress, “and it would play into the hands of their tax advisers, who would be well positioned to take advantage of the loopholes that were opened by it.”

The decades-long push to change the taxation of investment income has spurred a legal debate over the original meaning of the word “cost” in the Revenue Act of 1918, and over the authority of the Treasury Department to interpret the word in regulations.

“I think we ought to look at not penalizing Americans for inflation,” said Representative Kevin Brady of Texas, the Republican chairman of the Ways and Means Committee, who said he would like to see the Treasury Department make the change through regulation.

Mr. Bush’s Treasury Department determined that redefining “cost” by regulatory fiat would be illegal — a conclusion buttressed by the Justice Department’s Office of Legal Counsel, which found that “cost” means the price that was paid for something.

But conservatives have disputed this conclusion. Pushing Mr. Trump to make the change, Grover Norquist, the president of Americans for Tax Reform, has cited a 2002 Supreme Court decision in a case between Verizon Communications and the Federal Communications Commission that said regulators have leeway in defining “cost” to make the case that the Treasury Department can act alone.

“This would be in terms of its economic impact over the next several years, and long term, similar in size as the last tax cut,” Mr. Norquist said, suggesting that making the change would raise revenue for the government by creating new economic efficiencies and faster growth. “I think it’s going to happen and it’s going to be huge.”

He and others said last year’s tax cut would also pay for itself, but despite strong economic growth, corporate tax receipts have plunged and the deficit has soared.

According to the Penn Wharton Budget Model, indexing capital gains to inflation would reduce government revenues by $102 billion over a decade, with 86 percent of the benefits going to the top 1 percent. A July report from the Congressional Research Service said that the additional debt incurred by indexing capital gains to inflation would most likely offset any stimulus that the smaller tax burden provided to the economy.

“It is unlikely, however, that a significant, or any, effect on economic growth would occur from a stand-alone indexing proposal,” the report said.

Michael Graetz, a tax law professor at Columbia University who worked in the Treasury Department’s tax policy office when the department determined that taxing capital gains could not be changed by regulation, said he still thought that the decision to change the law should fall to Congress.

He pointed out that the department would have to make decisions about what types of assets would be indexed and that it would essentially be picking winners and losers.

“There’s certainly no legal authority for Treasury to choose what assets to treat this way,” Mr. Graetz said.

Two law professors, Daniel J. Hemel of the University of Chicago and David Kamin of New York University, wrote in a paper last month that states, charities and other entities could sue the Treasury Department if it tried to make the change. Mr. Kamin said in an interview that the change would create opportunities for gaming the tax code, in part because other parts of the code, such as interest payments, would still be unadjusted for inflation.

A framework for a second round of tax cuts, released by the Ways and Means Committee last week, did not address taxation of capital gains. It is highly unlikely that Congress will pass another tax bill this year because of the slim Republican majority in the Senate.

Democratic senators have written to Mr. Mnuchin, urging him to stand down.

“Treasury does not have the unilateral authority to take our tax code and expose it to widespread gamesmanship,” said Senator Ron Wyden of Oregon, the top Democrat on the Finance Committee. “Indexing capital gains under this regime is a boondoggle for the rich, plain and simple.”

A Treasury Department official wrote Mr. Wyden a two-paragraph reply this month. “We appreciate your taking the time to express the thoughts outlined in the letter,” it read. “We will take them under advisement.”

[The New York Times]

Trump: Tariffs are ‘the greatest,’ president says ahead of EU chief’s visit

“Tariffs are the greatest!” Trump said on Twitter, following up with what he called a simple choice: “Either a country which has treated the United States unfairly on Trade negotiates a fair deal, or it gets hit with Tariffs.” He added, “It’s as simple as that — and everybody’s talking!”

His tweet came one day before EU President Jean-Claude Juncker is scheduled to visit the White House for discussions on trade and other matters. Trump has imposed tariffs on imports of steel and aluminum and threatened new ones on cars. Juncker will reportedly focus on arguing that the EU is Washington’s friend, not foe.

[Marketwatch]

Trump threatens Harley-Davidson: If it moves operations overseas, ‘they will be taxed like never before!’

President Donald Trump threatened on Tuesday that Harley-Davidsonwill be “taxed like never before” if the motorcycle maker moves production overseas. He claimed that the iconic U.S. company was using increased trade tensions as an excuse to justify planned changes in manufacturing.

“A Harley-Davidson should never be built in another country-never! Their employees and customers are already very angry at them. If they move, watch, it will be the beginning of the end – they surrendered, they quit! The Aura will be gone and they will be taxed like never before!” Trump said in a tweet.

Harley said Monday it was moving some production overseas due to increased costs from the EU’s retaliatory tariffs against the Trump administration’s duties on steel and aluminum. No production will be moving to Europe as a result of the tariffs, according to the company. Harley’s overseas manufacturing plants are in Brazil, India, Australia and Thailand.

[CNBC]

Kudlow: ‘Don’t blame Trump’ for the trade conflicts he created

Top White House economic advisor Larry Kudlow contended Wednesday that President Donald Trump should not be held responsible for mounting trade conflicts with American allies, as the president gets set to face world leaders angered by tariffs imposed by the U.S.

“Don’t blame Trump. Blame the nations that have broken away” from fair trade practices, he told reporters. The global trade system “is broken and President Trump is trying to fix it. And that’s the key point,” Kudlow added.

The National Economic Council director downplayed concerns about tensions with key American allies ahead of Trump’s trip to Canada at the end of the week for a summit with leaders of the Group of 7 economies. Trump recently imposed tariffs on steel and aluminum imports from countries including the other six members — Canada, FranceGermanyItalyJapan and the United Kingdom — prompting retaliatory measures against the U.S.

The developments have prompted concerns about a trade war that could damage the U.S. economy or cause frayed relations with allies. The tariffs have sparked backlash not only abroad but at home, where Trump is trying to stop an effort from free trade Republicans to push back against the measures. Both U.S. lawmakers and foreign officials have questioned Trump’s national security justification for imposing the tariffs.

Ahead of Trump’s G-7 meetings, Kudlow, a former CNBC senior contributor, downplayed the prospect of a “trade war” with allies — calling the tensions “disputes that need to be solved.” He said he hopes the summit, where Trump will have bilateral talks with Canadian Prime Minister Justin Trudeau and French President Emmanuel Macron, will lead to substantive discussions on trade.

Last week, the Trump administration said it would not exempt Canada, Mexico and the European Union from tariffs on steel and aluminum imports. The decision came as the U.S., Canada and Mexico have faltered in efforts to strike a revised North American Free Trade Agreement.

Trump has long pledged to crack down on what he calls unfair trade practices and bad trade deals. He contends foreign countries had punished U.S. companies and stolen jobs away from American workers — one component of the appeal that carried him to the White House. Ultimately, he wants to increase U.S. exports and reduce trade deficits.

While numerous Republicans who support Trump — and Democrats who typically do not — have backed tough responses to alleged trade abuses by China, the tariffs on the key American allies brought the harshest response yet to Trump’s trade actions both domestically and abroad. Trudeau reportedly said he wanted to have “frank” talks with Trump during the G-7 meetings.

Asked whether Trump had damaged relations with Canada, Kudlow answered that he was not worried about temporary tensions.

“I have no doubt the United States and Canada will remain firm friends and allies,” Kudlow said.

The White House economic advisor also denied reports that Treasury Secretary Steven Mnuchin pushed for a tariff exemption for Canada during a meeting this week. Kudlow said both he and the Treasury secretary attended the meeting and did not say a word.

The U.S. has also sought help from allies as it tries to reach a deal to reduce trade deficits with China and stop alleged theft of U.S. intellectual property by Chinese companies. The U.S. has reached neither a broad deal with China to avoid potentially damaging tariffs, nor an agreement to revive Chinese telecommunications company ZTE, according to Kudlow.

He said he believes the rest of the world agrees with Trump about Chinese trade practices.

[CNBC]

Trump’s phone call with Macron described as ‘terrible’

A call about trade and migration between US President Donald Trump and French President Emmanuel Macron soured last week after Macron candidly criticized Trump’s policies, two sources familiar with the call told CNN.

“Just bad. It was terrible,” one source told CNN. “Macron thought he would be able to speak his mind, based on the relationship. But Trump can’t handle being criticized like that.”

A short White House readout of last Thursday’s call said the conversation was focused on trade and immigration.

“Both leaders discussed the migration problem in Libya, and timelines to solve it. President Trump underscored the need to rebalance trade with Europe,” the readout states.

The call came the same day the United States announced a unilateral decision to slap steel and aluminum tariffs on American allies, including Mexico, Canada, and the European Union.

In a statement issued by the Elysee Palace ahead of the call, Macron said he “regrets the US decision to confirm tariffs in steel and aluminum.”

“This decision is not only illegal, it is a mistake on many points. It is a mistake because it responds to a worldwide unbalance that exists in the worst ways through fragmentations and economic nationalism,” the statement continued, with Macron adding that “if these kind of things impacted our relations, it would have been the case since day one because he has decided to leave the Paris (climate) agreement.”

“I prefer to say things directly and not through the press; and I will tell him what I told you, which are my convictions that he knows already,” he said in the statement.

Thursday’s strained call is particularly notable because Macron is arguably the European leader to whom Trump is closest. In an interview with the BBC in January, Macron said he had a “very direct relationship” with his US counterpart.

“I’m always extremely direct and frank. He is. Sometimes I manage to convince him, and sometimes I fail,” Macron said at the time.

Trump can expect a similar call from British Prime Minister Theresa May on Monday, sources tell CNN. It’s not her style to be combative, but one source said May is expected to be direct in her criticisms and that Trump could expect a tough conversation.

[CNN]

Fact-checking Trump’s Nashville speech

The good news about President Donald Trump’s speech in Nashville last night was that he didn’t mention Roseanne Barr, which could have made that controversy much, much worse. The bad news? Try all of the false, misleading and dishonest claims he made.

“[There’s] never been an administration — and even some of our enemies are admitting it — that has done what we’ve done in the first year and a half. Think of it”

The tax law has been Trump’s only major legislative achievement, and he ranks behind other past presidents in bills signed into law.

“We’ve created 3.3 million new jobs since Election Day. If we would have said that before the election — I’m going to create 3.3 million new jobs — would never have [survived the] onslaught from fake news. Wouldn’t have accepted it, said no way you can do that”

While there have indeed been 3.3 million jobs created in the 18 months since Election Day 2016 (Nov. 2016-April 2018), there were 3.9 million jobs created in the 18 months before Election Day (May 2015-Oct. 2016) — when Trump was criticizing the state of the U.S. economy.

“Wages for the first time in many years are finally going up”

That is false; wages also increased during the final years of Obama’s presidency, per PolitiFact.

“[Nancy Pelosi] loves MS-13”

Pelosi was objecting to Trump calling undocumented immigrants “animals”; the White House says he was referring to MS-13 in his “animals” remarks. Pelosi never said she loved MS-13.

“So how do you like the fact they had people infiltrating our campaign? Can you imagine? Can you imagine?”

On Fox News last night, Rep. Trey Gowdy, R-S.C., said the FBI’s use of an informant for the 2016 Trump campaign was appropriate (see below for more).

“Mexico, I don’t want to cause a problem. But in the end, Mexico’s going to pay for the wall”

Mexico once again said it wasn’t paying for Trump’s wall. Here’s Mexican President Enrique Pena Nieto: “President @realDonaldTrump: NO. Mexico will NEVER pay for a wall. Not now, not ever. Sincerely, Mexico (all of us).”

“We passed largest tax cuts and reform in American history”

By either inflation-adjusted dollars or as a percentage of GDP, the tax legislation Trump signed into law last year ranks well below other tax laws, including those under Reagan or even Obama.

For an even more thorough account on Trump’s claims from last night, check out the feed from the Toronto Star’s Daniel Dale.

[NBC News]

Media

Ivanka Trump’s clothing company will be spared from tariffs, thanks to her dad

The steel and aluminum industries in China will soon be slapped with tariffs up to $50 billion by President Donald Trump. On Thursday, after China announced their intentions to retaliate against the United States with $50 billion in tariffs of their own against U.S. goods, Trump warned that his administration would respond with another set of tariffs, this time targeting $100 billion worth of Chinese goods.

Exempt from the proposed tariffs against China, however, is the clothing manufacturing industry.

U.S. officials say they used an algorithm to determine which goods to exclude from new tariffs. According to the Washington Post, the list was drafted to achieve “the lowest consumer impact,” ensuring goods like clothing and toys were excluded so as not to raise the cost on domestic consumer goods.

Exempting clothing from the tariffs provides a big break to American clothing companies that hold trademarks in China. One of those clothing companies belongs to the First Daughter of the United States, Ivanka Trump.

A recent report by the Huffington Post found that the president’s daughter and closest adviser rakes in a total of $1.5 million a year from the Trump Organization while still working at the White House.

Her dual role as adviser to the president and private business executive has continuously raised ethical red flags. No one can be entirely sure that public policy by this administration isn’t being driven by business motives, or whether countries may pursue business deals with the Trump family as a means to curry political favor with the administration.

The clearest example of this ethical line-blurring comes from early in the Trump presidency, when Ivanka dined with Chinese President Xi Jinping at the Trump family’s resort in West Palm Beach on the same day China approved three new trademarks for Ivanka’s company.

[ThinkProgress]

Trump renews call for internet tax, making a veiled threat against Amazon

President Donald Trump repeated an earlier call for an internet tax, in a thinly veiled shot at Amazon’s Jeff Bezos, who owns The Washington Post.

“The internet — they’re going to have to start paying sales tax because it’s very unfair what’s happening to our retailers all over the country that are put out of business,” Trump said Wednesday.

Trump also reiterated concerns about Amazon’s effect on the U.S. Postal Service as it struggles to keep up with online orders.

The comments mirror tweets from the president in December that named the e-commerce giant.

“There’s always been a fear for players like an Amazon or a Google that something like this could actually get through,” Daniel Ives, head of technology research at GBH Insights, told CNBC. “We believe it’s more noise than a real threat.”

There’s been speculation that the president’s shots at Amazon are aimed at Bezos, whose newspaper has published stories critical of the president.

Amazon already collects sales tax on products it sells directly to consumers, but has faced challenges from states over its policy of allowing third-party vendors to charge varying levels of sales tax.

In June South Carolina filed a complaint against the online retailer, and Amazon agreed in November to take on additional third-party tax burden in its home state of Washington.
The issue has garnered more attention as Amazon continues to take a bigger share of overall retail sales. Amazon celebrated its “biggest holiday” shopping season at the end of last year.

There is an underlying movement among traditional brick-and-mortar retailers to more heavily tax Amazon, Ives said, so the discussion is “something you have to keep an eye on.”

But the likelihood that an internet tax would pass is small, he said.
“Listen they’ve [Amazon] significantly changed the retail landscape across the world,” Ives said. “I think it’s more of the same where they’re getting in the crosshairs.”
Trump spoke before media and members of the administration Wednesday evening during the signing of the Interdict Act, which seeks to reduce drug smuggling through the purchase of opioid sensors.
Amazon did not immediately return a CNBC request for comment.

[CNBC]

Trump Falsely Claims GOP Tax Bill ‘Repealed Obamacare’

The Republican tax-overhaul bill may have only ended the individual mandate aspect of Obamacare, but that won’t stop President Trump from gloating to his base that he “repealed” his predecessor’s signature legislation. “When the individual mandate is being repealed, that means Obamacare is being repealed,” the president told the press during a cabinet meeting. “Obamacare has been repealed in this bill.”

Contrary to his claim, however, the Affordable Care Act is still largely intact—from its Medicaid expansion to the insurance exchanges it set up to regulations on insurance companies, including those mandating coverage for pre-existing conditions.

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